The State of the U.S. Economy; Interview with Author of 'Unintended Consequences'; Interview with Robert Caro

Aired May 6, 2012 - 10:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FAREED ZAKARIA, CNN HOST: This is GPS, the Global Public Square. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria. We have a great show for you today.

We will start with the economy. America's economy is looking somewhat better, Europe's is looking a lot worse. Can the euro bring the dollar down with it?

Then, a defense of the 1 percent and it comes from one of Mitt Romney's former partners who defends inequality.

Next up, the great historian Robert Caro on the president he has spent almost 40 years studying and writing about. Why Lyndon Baines Johnson could get things done in Washington and the lessons for today.

And is China changing from a company to a country? I'll explain.

But, first, here's my take. Whatever you thought of President Obama's speech on Afghanistan this week, it is now increasingly clear that the United States is winding down its massive military commitments to the two wars of the last decade.

We're out of Iraq and we will soon largely be out of Afghanistan. Osama bin Laden is dead, al Qaeda is a shadow of its former self, threats remain, but they are being handled using Special Forces and intelligence.

So, finally, after a decade, we seem to be right-sizing the threat from terrorist groups. Or are we?

While we will leave the battlefields of the greater Middle East, we are firmly committed to the war on terror at home. What do I mean by that? Well, look at the expansion of federal bureaucracies to tackle this war.

Since September 11, 2001, the U.S. government has created or reconfigured at least 263 organizations to tackle some aspect of the war on terror. Thirty-three new building complexes have been built for the intelligence bureaucracies alone, occupying 17 million square feet, the equivalent of 22 U.S. Capitols or three Pentagons.

The largest bureaucracy after the Pentagon and the Department of Veterans Affairs is now the Department of Homeland Security, which has a workforce of 230,000 people. The rise of this national security state has entailed a vast expansion in the government's powers that now touch every aspect of American life, even when seemingly unrelated to terrorism.

Some 30,000 people, for example, are now employed exclusively to listen in on phone conversations and other communications within the United States.

In the past, the U.S. government has built up for wars, assumed emergency authority, sometimes abused that power, yet always demobilized after the war. But this is, of course, a war without end.

So we continue to stand in absurd airport lines, turn down the visa applications of hundreds of thousands of tourists, businessmen, artists and performers who simply want to visit America and spend money here, and become ambassadors of good will for this country.

We continue to treat even those visitors who arrive with visas as hostile aliens, checking, searching and deporting people from airports at will.

We continue to place new procedures and rules to monitor everything that comes in and out of the country, making doing business in America less attractive and more burdensome than in most Western countries.

We don't look like people who have won a war. We look like scared, fearful, losers.

Let's get started.

And I am now joined by Martin Wolf, the chief economics commentator for the Financial Times and Rana Foroohar of Time Magazine.

Rana, first, the jobs numbers in the U.S. says (INAUDIBLE) you know, every few months we go through reading these tea leaves. The numbers seem a little worse than people were expecting.

Unemployment, on the other hand, dropped, but that's because fewer people are looking for jobs. What do you make of it?

RANA FOROOHAR, ASSISTANT MANAGING EDITOR, ECONOMICS AND BUSINESS, TIME MAGAZINE: Well, I think that this is continuing what we've seen the last few months of this wimpy recovery.

You know we are in recovery. The unemployment figure is taking down, but we don't really feel like it. You know income is still very flat. There's a lot of slack in the job market.

I think what's interesting is where the numbers are weakest. We're seeing a lot of public job cuts still, particularly at the local and federal level and I think you may start to see some of the weakening of exports particularly off the back of the slowdown in emerging markets. MARTIN WOLF, CHIEF ECONOMICS COMMENTATOR, FINANCIAL TIMES: I agree completely with that. Basically, I believe, for years, we were going to see a very weak recovery from a huge financial crisis when a large part of the world was in financial crisis. Now the emerging markets are slowing as well.

It's almost inevitable that we're going to see a very disappointing recovery -- very disappointing recovery in the jobs market without much stronger demand growth and there's nothing in the -- nothing there to generate that.

ZAKARIA: Martin, the thing that people worry about is Europe now because it seemed as though Europe had sort of temporary solved its crises or at least given itself breathing room.

Mario Draghi, new head of the ECB Cayman provided liquidity, essentially provided cheap loans to banks so there wasn't going to be a Lehman-like moment when there was a run on the banks. And people breathed a sigh of relief.

All of the sudden, people like you are worrying a lot again. Why?

WOLF: I never believed the argument. I mean, essentially, he provided a lot of liquidity and that prevented what was surely going to be an implosion of large parts of the Eurozone banking system. And he stopped a disaster, that's a very good thing, but the underlying situation remains the same.

We have governments with very serious debt problems, huge deficits which they have to finance or, in the case of Italy, at least huge rollover problems.

Who is going to finance them? Basically, only their own banks. Their banks are under enormous stress even now. They can't buy these assets without limit.

Meanwhile, of course, we have very weak economies, we have rising unemployment, the Spanish data horrendous, close to 50 percent youth unemployment. That makes politics terrible everywhere. You can see that in the elections.

So the politics then gets into the markets. The debt market gets worse because people look at the political stress. This is going to go on for years.

ZAKARIA: But is there a danger that there will be an implosion or an explosion?

WOLF: There is a danger. You can see it in a sense because we're going to get recurrent crises that will be political crises, elections of governments which say we don't want to do it; that will create a political crisis. That will get into the debt markets.

There will be friction among countries. There will be endless summits no doubt and, of course, at any moment, it's possible that one of these will blow over -- blow up, it will become unmanageable and people know that.

The stresses will go on for years. When you have a patient that is under tremendous stress for years, constant recurrent little attacks, of course, one of them might be fatal.

ZAKARIA: So the new normal in Europe is going to be this rollercoaster of constantly feeling like you're on the precipice of an economic meltdown.

FOROOHAR: I think so. I think the politics of fragmentation are extreme. I mean just a small, telling example, there were 8,000 police on staff in Barcelona during the latest European Central Bank meeting.

I mean when there is as many police at a central bankers meeting as there are at a European football match, you know you have problems.

ZAKARIA: You were always pessimistic about the British experiment with austerity. You argued that it was -- they were cutting too much that they didn't need to, that they could borrow.

Now, we have data that shows that Britain is in a technical recession, first major economy to have a double-dip recession in 40 years.

Does this mean this whole experiment with austerity in Europe was a mistake? But what could countries like Greece and Spain and Portugal and Ireland do who did have bond markets telling them you've got to get your budget in order.

WOLF: I think it's crucial to differentiate countries that can borrow from countries that can't. In the case of the Europeans, I think the answer was to have greater support from the center. But you can impose so much austerity on these countries --

ZAKARIA: Which means you wanted the Germans to give more money.

WOLF: You need some form of Eurobond. Basically, you need common fiscal support in a monetary union. You need a federal system in a federal union, which is what they have.

The problem is here we have these states, essentially, they're not really countries anymore which can't borrow themselves easily. The interest rates are so high that it puts them into a crisis. It doesn't give them the time for their economies to adjust which takes years.

You need some form of support and the only way to do that is at the center. Because that's that being provided, they had no alternative but to cut and that makes the crisis actually worse.

Britain is a different situation. For us, it was voluntary and the result has been exactly what I feared it would be added to some really rather unfortunate shocks, but I think the British government locked itself mistakenly into a five year program, far too rigid, you need more flexibility. ZAKARIA: But, basically, what Martin is saying is whatever the mechanism, that Europe needed more stimulus and less budget-cutting. It's fair to say and you're saying the stimulus should have come from Germany --

FOROOHAR: Right, I completely agree with that and I agree, again, that Eurobonds were needed and that more of a fiscal union was needed. The problem was the time for that was several years ago. I mean the politics of this just get more and more difficult with every passing month.

I completely agree that if you're going to be together in a union, it has to be a real union, an economic union, a political union and Europe's not there yet and that's why we have this politics of fragmentation.

ZAKARIA: So you wrote a cover story once about how, you know, what you were going to see in Europe was rising protests because of all these budget cuts.

FOROOHAR: Yes, you already are seeing that and you're seeing nationalism and protectionism everywhere. I mean border patrols are actually increasing between a number of countries.

I think you're going to see increasing threats to political incumbents, not just in France, but elsewhere. I think that the world is getting bumpier all the time in Europe.

I'm particularly concerned about what happens in France and Germany because if those countries go into recession, if their situation gets much worse, that's really could potentially affect the U.S.

ZAKARIA: Germany (INAUDIBLE) finally. IMF growth forecast says that even -- over the next five years, even Germany's growth is only going to be 40 percent of U.S. growth and they don't predict very strong U.S. growth.

So the engine that was powering Europe is itself slowing down, partly for demographic reasons.

WOLF: Well, I think the main reason it's not an engine. The problem is that German's competitive, but the engine was always demand growth elsewhere because Germany is so dependent on the growth of exports.

FOROOHAR: Germany and China.

WOLF: So Germany has now insisted, extraordinarily foolishly, that everybody else in Europe -- and remember the rest of Europe is still far and away its biggest market, it's well over half its trade. So, of course, German which is hugely export dependent then immediately slows down itself. It's completely self-defeating.

It makes impossible adjustment in the rest of Europe and it actually slows down growth dramatically in Germany. I think it's an extraordinarily short-sighted and foolish policy and it's having exactly the consequences you would expect.

And the U.S. will, I think, without doubt, unless they go crazy in the end of this year on this ludicrous fiscal cliff the U.S. has planned for itself -- unless something crazy happens, I expect the U.S. to be the strongest large developed country over the next several years.

When we come back, we have somebody who has written a book that defends the 1 percent. The case you haven't heard when you come back.

(COMMERCIAL BREAK)

ZAKARIA: My next guest is the author of what some are saying will be the most controversial, perhaps even hated book of the year. "Unintended Consequences" goes against the grain in arguing that the rise of the 1 percent is actually good for the 99 percent.

The author says that contrary to what the Occupy Movement might say, inequality does have its benefits. Ed Conard is here to explain. He is a former managing director at Bain Capital. Yes, he worked closely with Mitt Romney and is now one of his top donors. He joins me now.

So, Ed, let's start by just -- explain to me why is the rise of the 1 percent good for the economy?

ED CONARD, AUTHOR, FORMER MANAGING DIRECTOR, BAIN CAPITAL: It's not really the essential focus of the book. The book is about how to get the economy to grow faster. That growth, in the long run, is powered by innovation and risk-taking.

And part of what the book argues is that the pay-offs for risk- taking are essentially to getting more risk-taking in this economy and that that's good for the middle class and the worker poor.

ZAKARIA: So you want people to invest, take risks with their capital so that you spur innovation?

CONARD: Yes, although I think the economy has changed significantly from where it was in the 1950s, when capital investment to build an automotive industry and a highway system were essential to growth, to one today were 13 guys on a computer can create Instagram and a billion dollars of value in two years.

It's now much more powered by risk-taking than it is by the funding of investment.

ZAKARIA: But let me ask about the kind of alternative view, let's say, that somebody like Robert Reiss would present, which is that the problem with our economy has become that because of this inequality, what you have is enormous gains going to the top 1 percent and they can't consume all that much.

You can't -- at the end of the day, you can't consume, you know, $5 million a year, $20 million a year that people are making and that the result is that the economy lacks the kind of juice it would have if you had more middle class consumption.

That actually -- precisely what you're celebrating which is that the rich have all this money to spare is the problem, that you have a deficit of consumption --

CONARD: Sure.

ZAKARIA: -- because you don't have middle class incomes and the wages rising and these guys, therefore, can't power the economy and they are the 99 percent.

CONARD: Sure, it's a classic -- it's classic argument made by many people to be sure.

I believe that the current recession stems from a mistaken diagnosis of the financial crisis and that has lead to a reduction in risk-taking and consumer demand and that until we change that diagnosis and reorient the financial sector, we will have a slow recovery.

ZAKARIA: Leaving aside the economics, do you see how the politics or the tone of the book is going to rub people the wrong way because it sounds like sometimes you're saying, look, just let the 1 percent get richer and richer.

They're making investments that are good for everybody and it's you middle class folk who are actually not pulling your weight in the economy.

CONARD: Well, the tone of the "New York Times" article is going to get everybody antagonized, which I suppose is great because it will sell more books. It hardly says that the middle class is not pulling their weight.

If anything, it says that the most talented people are not pulling their weights because they need to take more risks and find more innovation to accelerate the growth in the economy.

ZAKARIA: And how do you do that?

CONARD: I think one of the things you do is you don't reduce the payoffs for risk-taking. How do you get people to take the risk when 99 percent of the time what they're trying to do is going to get pruned away and they'll be set back as a result? And that's we want to happen in our economy because the opportunity for innovation has changed dramatically. We're not exploiting the value or capitalizing on the value of cars today, we are 13 guys and a computer can create enormous value.

So when it comes to what happens to the distribution of income in the economy, we need a million Steve Jobs. Getting one more of them or two more of them or three more of them in the short-run causes some income inequality before we get enough of them where it changes course and goes in the other direction.

I would say what's the priority? Getting the economy to grow faster, getting more innovation to pump up employment and wages or dampening down income inequality. I'd take the first over the second that would be my priority.

And I think it's beneficial to the middle class and the worker poor.

ZAKARIA: You worked with Mitt Romney for years. Do you think he agrees with what's in this book?

CONARD: I think, at the highest level, he agrees with the book. He certainly celebrates entrepreneurialism, risk-taking to produce innovation.

The book covers a lot of ground. There's lots of counterintuitive, provocative, even controversial things in the book. There's nobody who agrees with everything that's in the book except for perhaps me.

ZAKARIA: What do you think of Mitt Romney as an executive?

CONARD: I thought he was an outstanding executive. He -- he's everything that you would expect. I mean, it's hard to watch the cartoon portrayed on the T.V.

He's brilliant. He has a deep understanding of how business works. He's great at consensus-building. He's decisive when he needs to be decisive. He surrounded himself with the most capable people.

He encouraged those people to challenge him and to challenge each other so that there was enormous preparation when you went into the room to talk to him and he had the highest level of integrity. He was only trying to do what was best in the long-term.

ZAKARIA: But when you watch this guy on the campaign trail, particularly in the primaries, would they make you wince?

CONARD: I think he does a great job, but let's be clear. He didn't spend his life making political speeches to the people. He spent a lot of time around a table like this with 5 or 10 decision- makers trying to get to the truth of a matter and make a very complex and difficult decision.

So he's not as practiced in that area as he could be if he'd had been a politician his whole life.

ZAKARIA: So if he is as brilliant and has so much integrity, explain to me how he could, at that Republican debate, when told if you could close the deficit and you would get $10.00 of spending cuts for $1.00 of tax increases would you take it, and he said no.

I mean, you know the math. Surely the Mitt Romney you're describing understands that you can't close this deficit without more revenues.

CONARD: I'd say two things. The first is I don't speak for Mitt Romney. I speak for myself. I put forward my argument. So the person who has to answer that question is, obviously, Mitt Romney.

Are there tough trade-offs to be made? Of course, there's tough trade-offs to be made. Does he understand that? I'm sure he understands it.

My view would be we'd be lucky to get him to be making those tough trade-offs because he would make them with more integrity and more drive for the truth than almost everybody I've ever worked with.

ZAKARIA: Ed, pleasure to have you on.

CONARD: Thank you.

ZAKARIA: Up next, What in the World? China's scandals and how the past is changing the present in Beijing when we come back.

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ZAKARIA: Now, for our What in the World segment. The storm over the blind Chinese activist Chen Guangcheng has understandably captured the world's attention in the last week.

But the event of much greater significance remains the ouster of Bo Xilai, the power party boss of Chonqing. The rise and fall of Bo is part of a much larger and potentially disruptive trend in China, the return of politics to the Chinese Communist Party.

We don't think of the Chinese Communist Party as a political organization these days. It's dominated by technocrats obsessed with economic and engineering challenges.

These men, and they are almost all men, are comfortable talking about detailed economic and technical data, laying out master plans for development, but they're not politicians adept at handling large crowds or palace intrigue.

This apolitical system is a recent phenomenon and the outcome of a conscious decision by the founder of modern China, Deng Xiao Ping. When the Chinese communists took power in 1949, the party was dominated by charismatic revolutionaries and military leaders.

Court politics, intrigue, ideological posturing and mass politics was pervasive in the new system. And the new leader, Mao Zedong, was a massive politician.

Mao presided over a period of hyperpolitics, political purges, the great leap forward, the cultural revolution; all designed to divide and destroy his opponents and consolidate his power.

It was against this backdrop that the next great leader of China, Deng Xiao Ping, took power in the late 1970s. Deng was determined to end the high drama of Chinese political life and focus on economic development.

He turned the party into a professional organization that was run by technocrats. By 1985, the party's top leadership, its central committee, was dominated by younger, college-educated graduates and the Politburo standing committee, the country's ruling elite, were all engineers

That tradition of technocracy has persisted. The Communist Party of China, a party whose history is tied up with peasants, workers and solders, is now the most elite political organization in the world.

It's system of promotion favors engineers, economists, management experts over anyone with grass roots political skills. For two decades, China has been run like a company, not a country.

But China is, in fact, a country, a vast, complex one with a long history of politics and eventually politics had to reemerge. China has reached a level of growth and development where the big questions it faces are not technical, engineering ones, but deep political, even philosophical ones.

Bo Xilai represented this emerging reality in two ways. In a system of colorless men, he was charismatic, conniving and political. He was comfortable in front of crowds, eager to push himself forward and rubbed against the grain of consensus decision-making.

But he also represented a new left, an ideological movement that emphasized social and cultural solidarity, the power of the state and other left-wing populist issues.

Whether he truly believed in these issues is irrelevant. Like all good political entrepreneurs, he saw a market for these ideas and he filled it.

Bo's ouster is the most significant purge in the higher ranks of the party since Tiananmen Square. And the party will hope that, as after those events, the party can return to its technocratic path.

But China has changed too much and politics in China in the future could be xenophobic, nationalist, populist they will almost certainly be messy and unpredictable like politics everywhere.

For more on this, see my essay in the latest issue of Time Magazine or on time.com and it's not behind a pay wall anymore.

Up next, American history, how Lyndon Johnson wielded power and what we can learn from that today. (COMMERCIAL BREAK)

CROWLEY: I'm Candy Crowley in Washington. Fareed Zakaria GPS will be back in 90 seconds, but, first, a check of the top stories.

French voters are deciding whether President Nicolas Sarkozy will keep his job. He is in a runoff today with Socialist candidate Francois Hollande who had a small lead in pre-election polls.

Five 9/11 suspects were arraigned in a military court at Guantanamo Bay yesterday. The men refused to answer the judge's questions, causing a 13-hour courtroom session. Their next hearing is in June.

A body has been found at the site of the Kentucky Derby. Louisville police say the body was discovered early this morning in a barn at Churchill Downs. The discovery comes a day after the 138th running of the Derby, which was won in the homestretch by I'll Have Another.

If you had a clear sky last night, you might have been able to see this super moon. NASA says it's about 14 percent bigger and 30 percent brighter than other full moons. The super moon occurs once a year.

Those are your top stories. Now back to Fareed Zakaria GPS.

ZAKARIA: 35 years, that's how long two-time Pulitzer Prize winning author Robert Caro has spent researching, thinking about, and writing about the life of President Lyndon Baines Johnson. The result of that extraordinary toil, other than two Pulitzer prizes, 3,388 pages so far.

Caro has just published the Passage of Power, the fourth volume of his LBJ biography. And the 76-year-old Caro is far from done. He says he will move to Vietnam to write the next volume on the warriors.

Before he does that, Robert Caro, joins me today.

ROBERT CARO, AUTHOR: Great to be back.

ZAKARIA: So in the last volume you had gotten to the point where Lyndon Johnson, through this extraordinary skill he had at running the senate, had passed the most -- the most important civil rights legislation since Reconstruction, perhaps one of the most important pieces of legislation in American history.

CARO: Yes.

ZAKARIA: Then he begins his years as vice president, which is a huge letdown for a man who had really run Washington.

CARO: Yes. And he is humiliated by the Kennedys. You know, they look down on him, and they're afraid of him. They're afraid to let him off the leash. So they keep him on a very short leash. He is, as you say, probably the greatest legislator in American history, certainly in the 20th Century.

They don't ask him for any advice on legislation. When he is invited to parties, like at Bobby Kennedy's Hickory Hill house, he is put at what Ethel Kennedy, Robert's wife, calls the losers table. And he know it's the losers table.

They have a nickname for him in the Kennedy White House: Rufus Cornpone (ph), or Uncle Rufus.

So he is humiliated and cut out of power completely for almost three years.

ZAKARIA: And he and Bobby Kennedy particularly really hate each other. Describe the first time they -- the meeting you describe.

CARO: Well, you say why did -- as a historian, you hate to use words as strong as hated, but it's not too strong to describe the feeling between Lyndon Johnson and Bobby Kennedy, and there were other reasons for it, but part of it was just chemistry.

ZAKARIA: And then Bobby Kennedy becomes the second most powerful man in America, and is treating Lyndon Johnson, the vice president, as a nothing.

CARO: As a nothing.

Johnson literally has to ask Kennedy's permission every time he wants to use a plane for a trip. Every word and every speech that he gives has to be cleared by the White House, really by Robert Kennedy.

He is humiliate -- one of his secretaries said the Kennedys, they made you feel that they were in and you weren't, so in many ways Johnson is just -- these are the terrible years of his life, you know?

Someone said it was like a great bull being put out to pasture late in his career.

ZAKARIA: Was part of it class? That the Kennedys were seen as this upper class, Harvard educated and Johnson was not?

CARO: Well, in Johnson's mind -- you know, there's a reality to it also. Jack Kennedy went to Harvard. A lot of the Kennedy people went to Harvard.

Lyndon Johnson went to Southwest Texas State Teachers College. He describes that as the poor boys school. I went to the poor boys school. You went to the Southwest Teachers College because you couldn't afford to go to the University of Texas. And he knew that.

All his life he knew he had been cheated out of an education, and he was -- he was ashamed of it.

ZAKARIA: When you get to the assassination, take us through -- what was it like for Johnson? We understand so much about it, but give us the perspective from the guy who suddenly realizes with all the tragedy that he has just gone from being a nobody to being the most powerful man in the world?

CARO: Well, I'll start in the very moment. He is riding in the third car behind President Kennedy. There is the crack of a gunshot. Most of the people think it's a backfire from a motorcycle or a firecracker going on, but the Secret Service agent who is sitting in the front seat of Johnson's car, a man named Rufus Youngblood, knows in the instant that it's a hunting rifle.

He whirls around and grabs Johnson's right shoulder. Johnson is hitting on the right side of the back seat and throws Johnson on the floor, leaps over the front seat, sprawls on top of Johnson, and Johnson -- and lays there shielding Johnson's body with his own while the cars speed off to Parkland Hospital.

Johnson would later say he will never forget his knees in my back and his elbows in my back. He says to Johnson as they pull in to Parkland Hospital, when we stop, get out of this car. We're not stopping for anybody. Don't look around. We're going to get you to a secure place.

They yank Johnson out of the car. He doesn't even have time to see what is in Jack Kennedy's car, which is actually the president's body still lying there on Jackie's lap. Four agents run him through the corridors looking for a secure place.

Johnson, you know, Fareed, doesn't know. He stands there for 40 minutes. No one gives him word. He tries to find out what President Kennedy's condition is, and they just say the doctors are working on him.

After 40 minutes, Kenny O'Donnell, who is a Kennedy aide, who loved Jack Kennedy, comes through the door, and Lady Bird Johnson was to recall in her diary that seeing the stricken face of Kenny O'Donnell, who loved him, we knew.

A moment later another Kennedy aide comes into the room and says to Johnson, Mr. President. It's the first time anyone has ever called him Mr. President.

So you say for 40 minutes the man who actually probably is already President of the United States is standing -- the thing about him is he stands almost motionless, standing against this wall. Lady Bird is sitting beside him. No one knows what he is thinking, but when he is addressed as Mr. President, he starts immediately giving decisive orders.

FAREED ZAKARIA, CNN HOST: And he orchestrates the famous photograph that we have all seen, because he wants Jackie Kennedy to be on that plane flying back to Washington. He wants the world to see that this was a peaceful transfer of power, but with the consent and, in a sense, the buy-in of the Kennedys.

CARO: Well, he takes steps to do that. You also have to say, however, with Lyndon Johnson, nothing is simple. And you have to say there is another motive that he says is the motive, I'm not leaving her. They tell him -- the Secret Service says, we're getting on the plane and we're taking off immediately for Washington, because the White House we can make secure.

Johnson says, no, you're not. I'm not leaving Mrs. Kennedy here, and they say to him, well, she won't leave without her husband's body. He says, then we'll wait on the plane for her and the coffin to come aboard.

It's also true that he wants Jackie Kennedy beside him when he is taking the oath to show, just as you say, the continuity. And she realizes this, too. You know, when Ken O'Donnell says Lyndon Johnson wants you beside him, she says something -- I don't -- the exact quote is in the book. "For history's sake, that's what I should do."

ZAKARIA: When we come back, we will ask Robert Caro what Johnson was like as president, how he was able to pass more significant legislation in his first few years in office than perhaps any president had been able to in history, and whether one can wield that kind of power in Washington today, when we come back.

(COMMERCIAL BREAK)

ZAKARIA: And we are back with Robert Caro, the author of the monumental magisterial biography of Lyndon Johnson, talking to him about how to make -- how to wield power in Washington today.

So Johnson becomes president, and you point out that he picks a small bill that he wants to pass because he wants a clear victory. Explain that.

CARO: Well, you know, Congress has stopped presidents. After the Supreme Court passing fight of 1937, Franklin Roosevelt is never able to get a major piece of domestic social welfare legislation through Congress. Neither has Truman. Congress has stopped presidents.

Johnson picks. He comes in, he says what -- the Kennedys haven't really taken him -- even let him know what's going on in the legislative process about Kennedy's civil rights bill. He has to say to Ted Sorenson, Kennedy's aide, I don't know what's in the bill. I have to read it in "The New York Times". But he says, what's on the agenda?

And the Republican conservatives have introduced the bill that would limit the president's authority on a minor thing, a weak deal with Russia. Johnson doesn't see it as minor, because Lyndon Johnson is a legislative genius. He wants to teach Congress a lesson, that there's a new man in charge now.

And he says I want to murder this bill. And what he means by murder is he doesn't want to just beat it. He wants to beat it by such a majority that they know. And he does that. Although he get the majority, he stays up most of one night, making telephone calls, cajoling, threatening, bullying, getting more votes until he does win by an overwhelming margin. The headlines say Johnson defeats Congress. And Johnson says in his memoir -- and this is a correct statement in my opinion -- at that moment, the power in Washington began flowing from Congress back to the White House.

ZAKARIA: How would you contrast the leadership styles of Kennedy and Johnson?

CARO: Well, you know, John Fitzgerald Kennedy had a greatness about him. I mean, he pulled this country through the Cuban missile crisis, and we know now -- and you know very well how close we actually came to nuclear confrontation with Russia, the nuclear -- something beyond confrontation.

He inspired the country, you know, in his speeches. The Peace Corps, he made people -- he just -- he brought out the best in America. What he didn't have a good record on is passing legislation.

Lyndon Johnson was clumsy. He was awkward. He was a terrible speaker. But what he could do -- you know, he says it's time to write it in the books of law. That's part of the job of a president, too, to write it in the books of law. No one was ever better than Johnson at doing that.

ZAKARIA: Now, contrast the style of Lyndon Johnson with this enormous legislative accomplishment, with the style of Barack Obama, as you have seen him.

CARO: Well, I know I'm supposed to say that there's this great contrast and Obama hasn't done enough, but I don't happen -- I feel Obama was faced with some real problems that we hardly remember anymore, the extent of the financial crisis. I happen to think he has made great strides.

You know, people find a lot wrong with health care legislation, Fareed, as do I, the bill that's passed. But I keep remember something that Lyndon Johnson said. Once we pass it, it's -- we can always go back and amend it. And I feel it was an accomplishment to get a health care bill.

ZAKARIA: But what about the issue that people raise about just the style, which is he delegated too much of the stimulus or even health care to congress that do you think he should have been more active, or, I mean, the alternative view is, look, the Republicans are very strong. The important thing is to get something done.

Would Johnson have taken a more activist role?

CARO: I can -- you can answer that definitely. Johnson would have been on the phone every minute with the leaders of congress. I mean, to watch him work on people, you know, everybody says Johnson was always talking. Not so. You listen to him on with -- when he wants somebody -- when he wants something from somebody, he -- he will let the senator talk and he will let the senator talk, and all you hear from Johnson sometimes is uh-huh, uh-huh. Until he hears what he wants to hear. What's the lever he can push with this guy? What does he want? You know? And then Johnson starts speaking.

You know, in this book Kennedy has a tax cut bill. It's snarled in the finance committee. Someone calls him at, like, 12:00 exactly and say they just broken for lunch, and we're three votes short. We're not going to get the bill through. Johnson says who are they? And the guy names the three senators. Johnson says to his secretary, get them on the phone for me one after the other.

One is Abe Ribicoff. He says you know, Abe, I put you on whatever committee he put you on. He says I want you to help me.

Ribicoff says, well, I have already persuaded my constituents. I'll lose face. Lyndon Johnson says to him, you save my face today, I'll save your face tomorrow. And Ribicoff knows that Johnson is a bad man to cross, but a good man to have on your side.

One of the other senators wants something, has to do with a mineral bill. Johnson says he will give it to him.

In 14 minutes if I have that right, the exact time is in my book, he has turned these three senators around. So if you want to know a contrast in style, I mean, Lyndon Johnson was a contrast with everyone else. He was the greatest legislator certainly since Roosevelt and perhaps even including Roosevelt. He was a legislative genius.

It seems impossible to pass a voting rights act in 1965. He does it vote by vote. And it's almost -- you know, if you care about -- my books are really about political power. If you care about political power, you say there never was a man with a talent -- a talent that is beyond a talent a gift that's beyond a gift. There never was anyone who could do this like Johnson.

ZAKARIA: Robert Caro, fascinating as always.

Up next, why a nation is taking out its anger on a dummy? I'll explain.

(COMMERCIAL BREAK) ZAKARIA: This week President Obama became the first president to ever deliver a televised address to the American people from a war zone. That brings me to the question of the week, which American president delivered the first ever televised address from the White House? Was it president, A, Roosevelt, B, Truman, C, Eisenhower, or, D, Kennedy? Stay tuned, and we'll tell you the correct answer.

Go to cnn.com/fareed for more of the GPS challenge and lots of insight and analysis on our website. Also, you can follow us on Twitter and Facebook. And, remember, if you miss a show, go to iTunes. You can get the audio podcast for free, and you can now buy the video version. Go directly there by typing itunes.com/fareed into your browser.

This week's book of the week, of course, is by my earlier guest Robert Caro. It is his latest, the fourth volume of his biography of Lyndon Baines Johnson. This one is called "The Passage of Power." The details especially surrounding the death of President Kennedy are breathtaking, but the bulk of the book is about how Lyndon Johnson wielded power from the White House. It is told in riveting detail and makes for a fantastic read.

Now, for the last look. In today's globalized world, we sometimes forget how intense the hostility between nations can be, especially when one of them is a paranoid dictatorship. Watch this. From North Korean state television, an angry mob in Pyongyang. What are they angry about? The crimes of this poor effigy which happens to be that of South Korea's president, Lee Myung-bak but, no, death by hanging isn't even enough for the dummy. So they have set attack dogs on it. Not enough? Try a big bad military tank. Didn't do the job? Don't worry, this isn't a human it's just plastic. Now they throw rocks at the dismembered head.

Finally, job done one hopes. It is a mysterious country, North Korea. We rarely get pictures from there, but I guess this is how they want the world to see them.

The correct answer to our GPS challenge question was, B. On October 5th, 1947, President Harry S. Truman went on television to tell the American people that they should eat less. Really.

Now, you might say that that's a message we could hear even today, but it actually wasn't for health reasons that Truman was saying that, but, rather, for humanitarian reasons. The people of Western Europe were starving and Truman announced that America would send grain surpluses overseas.

Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for Reliable Sources.